May 07, 2003—May 8, 2003 - For years, consumer products and entertainment companies have envisioned a world where physical products interact with the digital world. Philips Semiconductors and Sony are making progress on a bold attempt to turn that vision into a reality.

Last September, the two companies announced plans to create technology they call Near Field Communication (see Sony, Philips Creating RFID Link). One aim is to enable RFID communication between PCs, handheld computers, set top boxes and other consumer devices. Another is to enable a whole host of value-added services on the Web.

RFID smart cards will drive the Web Link system

Here's how the companies envision the system being used. You log on to your personal online portal by swiping your smart cart (with either a Sony or Philips RFID tag in it) by the RFID reader plugged into the USB port on your computer. Next, you shop for tickets to the opera. You pay for the tickets online, download them to your PC and then transmit them with NFC technology to an RFID tag in your mobile phone. Then, when you get to the theater, you wave the cell phone near a reader in the turnstile, and you're in.

The system could also be used for interactive games for children. An RFID tag in a Harry Potter doll might interact with a reader to open secret passages in an online game. And tags in smart cards might authenticate uses so that they can play interactive games online. (The system could also be used to prevent unauthorized copying of games.)

Philips commissioned the development of a new Web Link platform to enable these smart-card transactions to take place. "We are working with our value chain partners to build a new platform for the consumer," says Michael Letterer, Philips' manager of business sector ID services. "We are now rolling out field trials, and we expect to see it deployed broadly in 2004 and beyond."

Philips hired a software development company called Big Chief Partners to develop the software needed to link devices, authenticate users and provide the security that would enable content providers to offer for-fee services on the Web. Web Link has a general application program interface (API) that enables the software to communicate with the reader and learn about the features of the tag (how much memory it has, whether it has any encryption capability and so on).

On top of that are built integration layers that enable the system to communicate with enterprise applications. It also includes a backend system for managing all the tags registered to the system, security and authentication features to prevent unwanted access the system and logging and reporting tools. "It's really an end-to-end solution," says Big Chief' Peter Winer.

Philips and Sony are using existing RFID tag and reader technology to test the system. NFC readers will be available next year. In the mean time, the companies are lining up content providers to develop online services and the hardware companies that will produce readers and peripherals for the system.

Letterer says the partners have identified three killer apps, but he declined to reveal what they are. He considers smaller applications to be paying for tickets, purchasing pay-per-view events on a set top box and paying for and downloading music files to a handheld computer or cell phone.

Philips owns the source code for the Web Link software. It plans to offer it freely to some business partners and to license it to others. The real goal, however, is to drive the widespread use of RFID (and thus microchips from Philips Semiconductors) into consumer products and devices.

Sony and Philips certainly have the clout, the consumer electronics expertise and the RFID technology to make Web Link work. The real question is whether there will be enough value in the online services to drive consumers to buy new readers and use the system.

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